12 Common Ways Freelancers Miss Out on Tax Savings in 2025/26
Self-employed in the UK? You're probably overpaying tax — here's how to fix that.
Every year, thousands of freelancers leave £1,000+ on the table by missing easy tax deductions. Whether you're a sole trader or a one-person limited company, HMRC allows you to deduct genuine business costs before tax is calculated.
The trick? Knowing what counts — and what freelancers often forget.
In this guide, we'll cover the most commonly missed tax-saving opportunities in 2025/26, from overlooked expenses to smarter ways of taking income.
1. Your home office — yes, even your rent or mortgage interest
If you work from home, you can claim a portion of:
- Rent or mortgage interest
- Council tax
- Utilities
- Internet and phone bills
- Cleaning costs
The amount depends on how many rooms you use and how often you work there. If you don't want to calculate exact figures, HMRC allows a flat-rate 'simplified expenses' method — £10–£26/week depending on hours worked.
Common mistake: Claiming just £6/week (HMRC's minimal "default") when you could be claiming £1,000+ per year on actual costs.
2. Your phone bill — even if it's a personal contract
You can claim a percentage of your mobile phone bill based on how much you use it for work. That includes:
- Client calls
- Business emails or WhatsApp
- Social media marketing
Tip: Keep a rough log for a week to estimate your business use — even 50% of a £40/month bill is £240 a year.
3. Equipment, software and subscriptions
These are 100% deductible if used for your business:
- Laptops, printers, microphones, monitors
- Adobe Creative Cloud, Notion, Canva, ChatGPT Plus
- Web hosting, domain names, stock images or fonts
Tip: Items that last several years (like laptops) may need to be claimed under capital allowances or AIA — but you still get full tax relief in most cases.
4. Clothing (sometimes)
Most clothing isn't deductible — unless it's protective or branded.
You can claim for:
- Steel-toe boots, high-vis jackets
- Branded workwear
- Costume or uniform for specific roles (e.g. performers)
Not allowed: Normal clothing, even if worn only for work.
5. Travel — including food on the go
You can claim travel costs when visiting clients, events, or jobsites:
- Train, tube, bus or taxi fares
- Mileage (45p/mile up to 10,000 miles)
- Hotel stays
- Subsistence (meals while travelling)
Common mistake: Not claiming meals or mileage because it feels "small" — but 20 trips a month = £1,000+ a year.
6. Training and courses (sometimes)
If a course maintains or improves your current skills, it's allowable:
- CPD (continued professional development)
- Technical training
- Online workshops
But retraining in a new field doesn't count — HMRC won't let you deduct a coding bootcamp if you're a personal trainer.
7. Professional services & platforms
Fully deductible:
- Accountant or bookkeeper fees
- Legal advice (related to your work)
- Fiverr, Upwork, or LinkedIn Premium
- CRM tools, project management apps
Tip: Taxo's £99/year subscription is fully deductible too.
8. Insurance and memberships
You can deduct:
- Professional indemnity/public liability insurance
- Industry memberships (e.g. BECTU, FSB, IPSE)
- Trade unions (if related to your work)
9. Marketing and advertising
Running Google Ads, printing flyers, or even boosting Instagram posts? It's all deductible.
So are:
- Website design
- Business cards
- Freelance marketplace fees (Fiverr, PeoplePerHour etc)
10. Pension contributions — if you're a limited company
A huge but underused saving: your company can pay directly into your pension before Corporation Tax is calculated.
You can contribute up to £60,000/year (2025/26) depending on previous years' allowances.
Example: Put £10,000 into a pension → save £2,500 in Corporation Tax (25%).
11. Using your car — even for part-time work trips
If you use your personal car for work journeys (not commuting), you can claim:
- 45p/mile for the first 10,000 miles
- 25p/mile after that
Or you can claim actual running costs (petrol, insurance, servicing) — but only the portion that relates to business.
Most freelancers use mileage — it's simpler and usually works out better.
12. Bad debts (if you're on accrual basis)
If you invoice a client and they don't pay, you may be able to deduct the unpaid amount from your profits — but only if:
- You report income on an accrual basis (not cash basis)
- You've made reasonable attempts to collect it
How much could this save?
It's not unusual for a freelancer earning £40,000/year to miss £5,000+ in valid expenses — meaning overpaid tax of £1,000 or more.
Final tip: track in real time, not at year-end
Most missed deductions happen because people:
- Forget receipts
- Don't track mileage
- Miss small-but-eligible costs
That's why Taxo lets you snap receipts, log mileage, and track deductions in real time — all via WhatsApp.
Final thought
If you're self-employed, every pound you don't claim is a pound you pay tax on.
Taxo can help you spot and track all of this automatically — and file your return, too.
Start your free trial and never miss a deductible again.